(Bloomberg) — Qualcomm Inc., the world’s largest maker of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting that demand for handsets is picking up after a two-year slump.
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Sales for the three months ending in June will be between $8.8 billion and $9.6 billion, the company said in a statement on Wednesday. Excluding certain items, earnings are $2.15 to $2.35 per share. Analysts had forecast revenue of $9.08 billion and profit of $2.16 per share.
The outlook signals that the smartphone market has begun to recover and is consistent with Qualcomm’s forecast that demand will gradually recover in 2024. The San Diego-based company also reported better-than-expected second-quarter results, boosted by progress in China, where it sells technology to local phone makers.
Shares rose about 3% in extended trading following the announcement. They had previously closed at $164.11 in New York trading, up 13% this year.
In the longer term, Chief Executive Cristiano Amon is trying to reduce dependence on phone chips by moving into personal computers, vehicles and other markets. But Qualcomm remains heavily dependent on demand for mobile phones, particularly in China.
For the second quarter ended March 24, earnings were $2.44 per share (excluding some items). Sales rose 1% to $9.39 billion. Analysts had estimated profit at $2.32 and sales at $9.32 billion.
Sales in the smartphone segment rose 1% in the latest quarter, slowing from the 16% increase in the previous three months. But China is a bright spot, Qualcomm said in a slide presentation. Sales to phone makers in this country, the largest market for these devices, rose 40% in the first half of the fiscal year, “reflecting our strong competitive positioning and recovery in demand.”
Qualcomm’s Internet of Things group, which makes electronics for internet-connected devices, is suffering from an oversupply of inventory. Sales for this unit fell 11% in the most recent quarter. Qualcomm’s automotive sales rose 35%.
The company’s main product is a processor that powers many of the world’s best-known phones, including many of Samsung Electronics Co’s Galaxy line. It also sells the modem chips that connect Apple Inc.’s iPhone to networks.
Another portion of Qualcomm’s profits comes from licensing the fundamental technology that underlies all modern mobile networks. Phone makers pay these fees whether they use Qualcomm-branded chips or not.
(Updates with additional results starting in the third paragraph.)
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